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battags
08-08-2003, 07:16 AM
Has anyone heard of the new federal taxes that supposedly just went into effect? I have heard that independant small business owners now must charge an additonal tax for some services.

I don't know if it applies to LCO's or not, but I do know that it applies to independant beauticians, barbers, and some others providing service.

Any help would be great.....

tiedeman
08-08-2003, 08:46 AM
the only recent tax changes that I know about happen the first part of July

wriken
08-08-2003, 10:20 AM
Originally posted by tiedeman
the only recent tax changes that I know about happen the first part of July

whats that the Publication 15-T?

tiedeman
08-08-2003, 10:21 AM
to be honest with you wriken..I have no idea the name of it

wriken
08-08-2003, 10:28 AM
its for the change in tax for employee's

tiedeman
08-08-2003, 10:30 AM
Originally posted by wriken
its for the change in tax for employee's

yup thats the one

Fvstringpicker
08-08-2003, 11:34 AM
Most folks trouble is that think of the IRS and taxes as some government bureaucracy.

MacLawnCo
08-08-2003, 08:40 PM
Battags,

since you are from Ohio, I am assuming that you are refering to the list of services ohio has added that they will now be collecting sales tax on. Most important to us is the sales tax on snow removal. Also, effective July 1 2003, most county's sales tax has increased approximately 1%. For example my county has gone from 6 to 7%. Hope that helps.

battags
08-08-2003, 09:31 PM
I see, I heard it was a federal tax of some sort and that I would be effected. You have made sense of a confusing situation.

So if snow plowing is included, how about lawn care? How do I get more info?

B

MacLawnCo
08-08-2003, 10:07 PM
Battags,

I just dug this one up for you. Ohio Business Forms (http://lawnsite.com/showthread.php?s=&threadid=38614) Hope this helps you some more. ANy more questions just ask.

lrose2
08-08-2003, 10:15 PM
battags,

You will need to apply for and receive a vendors license from the State of Ohio Taxation Department. Once you receive your vendors license from them you will be required to collect and pay sales tax on your sold services. The sales tax rates vary by county but most are 7-7.5%. This is one of the things that need to be done to run a legit business in Ohio. And, oh yeah, lawn care is one of the services that are named as having to comply with this law. Search out the Ohio Government website and read away.

MacLawnCo
08-08-2003, 10:31 PM
exactly what Larry said, but i have the required forms attached in the link 2 above this post.

LawnLad
08-08-2003, 10:39 PM
HR 95 (The budget bill) which was passed in June added a list of services previously exempt from sales tax to the list that went into effect on July 1st and August 1st. This includes many personal services including dry cleaning, towing services, delivery charges (for furniture, appliances) and snow removal.

The state sales tax was previously 5% and was raised to 6%. On top of the state sales tax which applies to all counties across the board evenly, each county asseses their own tax rate. For instance Cuyahoga is 2%, for a total of 8% sales tax.

A list of sales tax rates by municipality can be found here:
http://www.state.oh.us/tax/Business/Sales_Tax_Rates/sales_rates_080103.pdf

Here is a fact sheet with an overview of the changes as a result of HB 95:
http://www.state.oh.us/tax/Publications/Expansion_of_Sale_Tax.pdf

Contractors that provide snow services must have a Service Vendor's License if you perform snow removal by any mechanized means which generates sales greater than $5,000. At this point I don't find a written description of how "Snow Removal" is defined. The industry defines snow removal differently I'm sure than the politicians.

If you already have a service vendor's license for your existing core business (e.g. landscaping) you do not need to get a second or separate license. Service Vendor's Licenses are for those businesses that travel to perform their services, different from "Vendor's License" which is for businesses that you goto for services such as a dry cleaner.

If you do not currently collect sales tax for landscaping services, which is requried in the state of Ohio, you can contact The Ohio Department of Taxation at 888-405-4039.

You can find the application for the Service Vendor's Liscense at:
http://www.state.oh.us/tax/Business/Misc_ST_Forms/st1s.pdf

battags
08-08-2003, 11:34 PM
Ok, I talked to my tax accountant earlier tonight and he is going to do some more checking in the morning. Here is what he said....

Up until now, my business was 'legit' and well within bounds of all Ohio and Fed. Tax Laws. I send a 1099 to a part-time employee and pay income tax on the business. All my expenses are documented, a business account is maintained, and I have never had a problem filing this way in the last 5 years. According to him, I was not required to get a vendors license (at least prior to this new bill) due to several factors (although I don't know what they are) and still don't have one. I trust this guy as he is a close family friend, has been in the business for 18 years, and worked for the Ohio Dept. of Taxation. He knows what he's talking about.

I carry 1.5 mil in liability, OWN new quality equipment, and dont have to brag about my quality of service. I'm sure lrose2 didn't mean to sound condescending in his post, but my business is 'legit'.

Leo, my tax guy, did say that he was not familiar with how the new bill would affect me and would find out more on Monday. Soooooo, I'll let you all know what he says. Looks like, worst case scenario, I'll have more paper to shuffle each year.....

lrose2
08-09-2003, 07:45 AM
Battags,

No offense meant. Just trying to help you out. This new bill has nothing to do with you needing a service vendors license. You have needed that from jump street according to law. Sorry if I upset you!

Green in Idaho
08-09-2003, 10:30 AM
Originally posted by battags
Up until now, my business was 'legit' and well within bounds of all Ohio and Fed. Tax Laws. I send a 1099 to a part-time employee

El wrong ola....

Employee and 1099 do NOT go together. The fact you called him "an employee" means you should be reporting him as such and withholding taxes for him and issuing a w-2.

It does NOT matter if you have been doing it incorrectly for 5 years, and it does not matter if Leo opened mail for the fine Ohio Dept. of Taxation. That is wrong reporting of employees. The IRS will hammer you like a penny nail. And then Workers Comp with pull your nail out chew it up and spit it out for the Ohio Dept of Labor to play with. End result = $$$$$ due.

Want more info --need proof? No problem. Let me know.

Sorry to express the bad news.

battags
08-09-2003, 10:26 PM
Originally posted by lrose2
Battags,

No offense meant. Just trying to help you out. This new bill has nothing to do with you needing a service vendors license. You have needed that from jump street according to law. Sorry if I upset you!

I'm not offended. I am pissed, but not at any of you guys. I'm pissed to hear that I may have been doing it wrong for all this time. Monday can't come soon enough so I can get some answers as to what's going on.

Green in Idaho
08-10-2003, 12:33 AM
Battags,
No need to wait until Monday, cruise a little research Sunday BEFORE you talk to Leo.

With some information in your pocket you will have better questions. One question would be why he didn't inform you of the Ohio sales tax issure BEFORE now? That is his job IF you utilize him year around. If he just does your taxes in April and works for the big national tax service, then you have little to gripe about. But if he's your "accountant" you have an issue with him.

LawnLad and Mac gave info here for you to determine the Ohio issue all by yourself. And that was your original questions. Right?

And for the employee issue see the IRS Web site.
From the IRS Web site:

Caution: If you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty.

Here is a great link http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

You can know before Monday if you do the surfing and reading.

Is it possible you are doing W-2 and remitting withholding? With just some confusion earlier? Are you writing a check to the IRS every quarter? Do you have a worker' comp policy?

Any way I would suggest getting the information for yourself instead of going in with a "What's up with that?" question. Print the stuff out to be able to take with you as reference.

If you find you are totally off-course you may want to tactfully find another acct. :confused: